Australia: Taxpayers liable for payroll taxes for subcontractors (Supreme Court of New South Wales decision)

The Supreme Court of New South Wales (NSW) on October 17, 2025, held that the taxpayers—two commercial cleaning companies—were liable for payroll taxes with respect to subcontractors the taxpayers used to provide services to clients.

The case is: SKG Cleaning Services Pty Ltd v. Chief Commissioner of State Revenue [2025] NSWSC 1219.

Summary

The taxpayers supplied cleaning staff, consisting of both subcontractors and employees, to clients at locations such as shopping centers, government facilities, and office buildings. The taxpayers entered into formal written agreements with these clients, who did not maintain their own cleaning personnel, thereby assigning full responsibility for the provision of cleaning services to the taxpayers. To fulfil their contractual obligations, the taxpayers engaged multiple subcontractors to deliver such services, using equipment supplied by the taxpayers and stored at client premises.

The Chief Commissioner assessed the taxpayers for payroll tax, arguing that the payments the taxpayers received from clients fell within the employment agency contract provisions of the Payroll Tax Act 2007 (NSW). The court upheld the Commissioner's assessment, finding that the taxpayers’ arrangements did fall within the employment agency provisions and were liable for payroll tax.

For more information, contact a KPMG tax professional in Australia:

Priscilla Tang | ptang@kpmg.com.au

David Sofra | davidsofra@kpmg.com.au

Kevin Y. Lin | kevinylin1@kpmg.com.au

Luca Gibbs | lgibbs2@kpmg.com.au